Articles in Category: Ferrous Metals

Our forecast and research team spends the bulk of its time studying price activity as it relates to commodities in general, industrial metals in particular and the underlying price behavior of each metal.

For those that subscribe to our monthly forecast report or downloaded our annual report nearly all of the commentary and supporting data tell one story: metals markets remain bearish.

GOES_Chart_November_2015_FNLThe why behind the call appears in many of our writings both on the site and within our forecast reports.

Why should GOES Be Any Different?

Simply put, grain-oriented electrical steel (GOES) does not behave like the rest of the base metals, or steel products for that matter, because it operates under quite a different set of market conditions. Some of those conditions appear obvious and others less so.

The Regulatory Atmosphere

Besides looking more like an oligopoly vs. an open market with ample opportunity for price discovery, GOES markets have seen dramatic changes as a result of energy efficiency standards and regulations. These regulatory changes have single-handedly altered the GOES pricing landscape.

DuPont has an excellent information page on the regulatory changes enacted since 2007 and continuing through 2016 impacting this market. Suffice it to say, the 2016 regulations add additional energy efficiency requirements for 3-phase low-voltage, general-purpose (LVGP) and medium-voltage (MV) transformers. These regulations come on top of energy efficiency requirements for LVGP transformers and MV transformers.

The Bottom Line

To meet these new energy requirements, manufacturers needed to upgrade the materials used to make this type of equipment. Beginning in 2007, one could argue that the commoditization of the standard grades of GOES began as the materials leading to more core loss (and thus, poorer energy efficiency) entered a declining market as electrical power equipment manufacturers started sourcing more technically demanding grades. This bifurcation of the GOES market has now become much more extreme.

According to a recent TEX report, the European market landscape has changed dramatically. The report estimates Europe as a 300,000-metric-ton market for 2016. However, the market mix has shifted from approximately two-thirds of the market buying the commodity grade material and a third of the market buying the more value-added material, to nearly two-thirds now consuming high-grade materials (coming from producers in Japan and Korea) vs. one third of the demand purchasing the more traditional commodity grades.

MetalMiner has conducted a similar market sizing analysis here in the United States with demand pegged at 250,000/mt per year. MetalMiner has not sized the commodity grade market from the value-added grades, but one can assume a similar shift is also occurring.

What This Means For Prices

As domestic manufacturers enter into negotiations for contract orders commencing in January 2016, one might expect to see two different price trends – rising prices for the value-added grades (due to tight supply and strong demand) and continued pressure on the commodity grades. However, market participants have confirmed that domestic mills have sought higher prices for both non-oriented electrical steel and GOES, though foreign producers’ prices for the commodity grades have declined.

In addition, the Korean and Japanese producers have little to no material available, particularly in high-grade GOES. Buying organizations caught short on material would do well to identify Chinese sources of supply.

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Shipments from US steel companies were down in September and the federal Highway Trust Fund reached its lowest level in several decades in July.

Steel Shipments Down in September

The American Iron and Steel Institute (AISI) reported that for the month of September, US steel mills shipped 7,120,663 net tons, a 4.7% decrease from the 7,470,120 net tons shipped in the previous month and a 15% decrease from the 8,372,929 net tons shipped in September 2014.

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Shipments on the year-to-date in 2015 are 66,162,973 net tons, a 10.7% decrease vs. 2014 shipments of 74,123,773 net tons for the first nine months of last year.

A comparison of September shipments to the previous month of August shows the following changes: cold-rolled sheet, down 7%, hot-dipped galvanized sheets and strip were down 8% and hot-rolled sheets were down 10%.

How Low Did The Highway Trust Fund Go?

According to the US Energy Information Administration, the Highway Trust Fund reached its lowest level in decades earlier this year, ending July at $6.1 billion dollars.

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A congressionally approved transfer of more than $8 billion boosted the fund’s balance to end the fiscal year (September 30) at $12 billion, but that is still the second-lowest year-end level since 1984.


Two major iron ore miners are under pressure after a dam burst in Brazil causing widespread disaster and at least three deaths. The British steel industry is urging the EU to enact dumping curbs against China.

Widespread Destruction After Mining Dams Break

More than two dozen people remain missing days after a deadly mining accident in Brazil involving two of the world’s largest mining groups, authorities in the country said on Sunday.

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Rescue services said three people were confirmed to have died when two dams burst and engulfed a small town in mining waste, and the whereabouts of another 28 people — including 13 mine workers — remained unknown.

Brazilian media reported on Sunday that what is being called the “mud tsunami” had hit areas more than 60 miles away from the dams.

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BHP Billiton said its chief executive Andrew Mackenzie would travel to Brazil this week as the Anglo-Australian miner confronts the aftermath of the accident along with Vale SA, its Brazilian joint-venture partner. BHP and Vale own 50% each of Samarco, the independently operated iron ore miner that controlled the project in Minas Gerais state where the accident occurred late on Thursday.

British Steelmakers Want Dumping Duties

British steelmakers called for business minister Sajid Javid to insist on immediate action against Chinese steel dumping when he meets European Union economy and industry ministers in Brussels today. Britain requested the emergency meeting after nearly 4,000 of its steel jobs were lost or put at risk in October — equivalent to about a fifth of the sector’s workforce — with steelmakers and unions pinning much of the blame on China.

This is the final post on steel construction and the restoration of Wrigley Field. See installments one, two and three if you missed them.

When the Chicago Cubs’ season opened in April new challenges arose for the restoration of Wrigley Field, the kind that come from installing steel during an active baseball season.


Steel supports and rebar being prepared for below-grade work at Wrigley Field’s new adjacent support building. Image: Jeff Yoders

Expediting of materials moved from Wrigley Field’s green lot moved to a south side steel yard. Steel erection on the new video scoreboard in the right field bleachers took place around game times.

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Work on the bleachers finished in June, and general contractor Pepper Construction is continuing work on a new plaza building adjacent to the park. Work on this new construction building will continue into phase two, and it will provide a spacious underground clubhouse for the players as well as office space and other amenities.

Concrete work is completed for the foundations and the first level basement of the new building. Steel is going up as excavation continues. The steel is completed up to the 6th floor now. Sheathing and building envelope work on the new building will continue through next season.


Structural steel that makes up the skeleton of the new Wrigley Field support building is being installed while simultaneous work goes on underground beneath it. Image: Jeff Yoders

“This has been so exciting for us,” said Kevin Heatter, project executive for Pepper. “Fans will see some really cool construction while seeing a baseball game. You won’t get that anywhere else. I tell the young kids in the trailer that what you will experience on this job, you will only see every 10 or 15 years if you’re lucky.

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“You will likely never see a project exactly like this again because of the historic nature of Wrigley Field. It’s a unique project in a unique location that requires some of the best minds in our industry to come together to develop creative ways to build it. That’s what makes it a lot of fun. It’s a challenge, sure, but boy it’s what gets you excited in the morning when you come in.”

Our Stainless MMI held steady at 59 for the second consecutive month.

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Nickel prices are hovering near the lows of 2009. That level is giving support to prices as traders remain hesitant on whether nickel prices can go below recession levels. While other base metals are still trading comfortably above recession lows, nickel could be the first industrial metal hitting that psychological level.

Stainless_Chart_November-2015_FNLAnother factor supporting prices this month is the speculation that Glencore Plc, the world’s fifth-largest producer of nickel, could cut nickel production following cuts to its copper and zinc output to reduce its heavy debt levels. Moreover, other industry shutdowns could follow given that 60% of the world’s nickel is estimated to be non-profitable at current price levels.

Can Prices Go Up?

Some analysts argue that Philippine ore won’t be sufficient to cover nickel pig-iron (NPI) producers’ capacity in China, tightening the nickel market. However, Indonesia is already working on producing more NPI, as the country is pushing to win more profit from its mineral sources. Chinese producer Tsingshan Group is set to triple its capacity to produce NPI in Indonesia as soon as May, having an installed capacity of 900,000 metric tons of NPI.

Even though nickel’s supply-demand dynamics may actually be tightening, the market is facing other problems:

High Stock Prices

A period of super-fast production growth has left record high inventories. Although LME stocks declined in October, they are still above 400,000 Tons, almost 5 times higher than in 2011. Such a huge overhang of metal is pressuring prices, removing any hopes of market deficit.

Demand Woes

The slowdown in Chinese demand is keeping a lid on any price increase. Moreover, investors fear that the worse is yet to come. So far, demand woes are trampling supply woes, underscoring that significant price increases won’t likely happen until demand fears vanish.

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Finally, rumors of an increase in US interest rates from the Federal Reserve are pushing the dollar higher. The dollar index is surging as foreign currencies tumble. This is another, and not less important, factor that will continue pressuring nickel prices.

What This Means For Metal Buyers

There is no point in making predictions. After this pause, nickel prices could go both ways but we wouldn’t discard the possibility of nickel falling below the lows of 2009. Buying only small quantities remains the dominant purchasing strategy but buyers should watch nickel’s support and resistance levels to be ready to change their strategy.

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President Barack Obama today rejected the proposed Keystone XL pipeline, ending the political fight over the Canada-to-Texas project that has gone on for much of his presidency.

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Secretary of State John Kerry concluded the controversial project is not in the country’s national security interest, and Obama announced from the White House that he agreed.

Pipeline in California's Mojave desert.

The Keystone XL pipeline was rejected by the Obama administration this morning.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership,” Obama said. Read more

This is part three of a series on how 3D design and construction procurement was used in the restoration of Wrigley Field. See parts one and two if you missed them.

Wrigley Field’s bleacher restoration schedule was aggressive and precise, since the MLB off-season is among the shortest in pro sports. It’s also the coldest, as the term “boys of summer” means the only time to work on your stadium is during winter. The Chicago winter. Known for its wind and snow.

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The Chicago winter did not cooperate with the off-season schedule. Much colder than the relatively light winter in 2013, the weather complicated the ballpark restoration and concurrent city of Chicago work to modernize underground utilities serving the stadium and the neighborhood.


Structural steel placement for the new Wrigley Field jumbotron had to take place during the cold winter months. Image: Pepper Construction

The bleacher phase of the project was completely exposed to the elements and that made for a grueling and challenging January, February and March. Safety is the number one priority for general contractor Pepper Construction and many days the temperatures were simply too cold for the team to safely work.

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The House of Representatives has passed its version of a 6-year infrastructure bill and Tata Steel is moving ahead with cuts due to cheaper Chinese imports.

Infrastructure Bill Clears the House

The House of Representatives on Thursday overwhelmingly approved a multiyear highway bill that includes more than $340 billion in transportation and infrastructure programs to address the nation’s deteriorating roads, transit railways and bridges.

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The measure would also revive the Export-Import Bank, a trade-promoting agency that expired last summer amid attacks from conservative lawmakers. The House has named negotiators to hammer out a compromise version with a somewhat similar 6-year bill that passed the US Senate earlier this year.

Both chambers are trying get a bill to President Obama’s desk by November 20 when the existing funds for federal transportation projects will run out.

Tata Steel Will Press Ahead With Cuts

Tata Steel Ltd., Europe’s second-largest steel producer, said on Thursday it will press ahead with cost cuts and restructuring to cope with a surge in cheap Chinese exports to Europe and India, its two key markets.

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Tata, which posted a surprise 22% rise in second-quarter net profit after selling some non-essential holdings, is trying to revive its struggling British operation and has cut thousands of jobs since buying Anglo-Dutch Corus in 2007.

The Renewables MMI fell 3.6% this month, erasing last month’s gains and losing a bit more to hit a fresh all-time low.

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As we cautioned last month, renewables look like they have farther to fall. The low-price range they have been trading in for the past six months is, itself, a downward departure from its previous range, in the 60s, where it had been since January 2013.

Why Renewables Prices Stay Low

The bearish commodity picture is certainly a part of the problem for renewables but the sector looks increasingly price-challenged as most of the metals trading in this range, such as steel, had sharp losses and selloffs in the last year whereas renewables have lost comparatively little of their value in 2014 and 2015.

Renewables_Chart_November-2015_FNLSteel plate, itself, has been a big part of renewables’ falling price range this year. Used in the construction of wind turbines and some certified sustainable construction projects, steel plate prices have dipped under pressure from cheaper overseas imports and a strong dollar.

Silicon and cobalt have fallen, as well, despite strong demand for photovoltaic solar panels. Both wind and solar have proven themselves as power generating technologies, so much so that this week, unlikely advocate BP said the cost of producing energy from renewable sources will fall sharply over the next 35 years. BP’s statement went on to say without a system in place that levies a charge for carbon emitted into the atmosphere, natural gas and coal will remain the cheapest source of supply to 2050.

We’re BP and We’re Here to Help

Hard to believe that BP is truly on the cap and trade bandwagon but, as an entity, it would know energy markets better than most.

BP’s report analyzed the impact of technology on energy production and consumption in coming decades. The oil giant said that a carbon price of $40 a metric ton would make gas a more economical power source then coal—a more carbon-intensive fuel—but a higher carbon price will be needed to make wind and solar more competitive.

“Without a price on carbon, fossil fuels are fiercely competitive,” said David Eyton, BP’s technology chief.

The oil giant’s long-term forecasts project that coal will remain the dominant fuel in power generation by 2035, but will lose market share to natural gas and renewables. In transportation, liquid fuels are expected to continue to dominate in coming decades.

BP and other large oil companies are producing an increasing volume of natural gas, with BP expecting it to comprise 60% of its production by the end of the decade.

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The coal industry has defended its role in the energy mix, highlighting that advanced technologies can sharply reduce carbon emissions and that coal remains a critical fuel, particularly in fast industrializing emerging markets. Mass market adoption will be needed for solar, particularly, to be anything but a power generation pawn in the war between coal and natural gas.

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Follow Jeff Yoders on twitter at @jyoders19.

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The American Iron and Steel Institute, the Steel Manufacturers Association, the Canadian Steel Producers Association, CANACERO (the Mexican steel association), Alacero (the Latin American steel association), EUROFER (the European steel association,) Instituto AcoBrasil (the Brazil Steel Institute), the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports released a joint statement today about China’s attempt to gain market economy status in December 2016. They’re not big fans of it.

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It read:

“The global steel industry is currently suffering from a crisis of overcapacity and the Chinese steel industry is the predominant global contributor to this problem. Read more